Apple to Buy Cobalt Directly from Miners. But Where Does Cobalt Come From?

Apple Inc. is going to buy long-term supplies of cobalt directly from miners for the first time, according to a Bloomberg report. The company is one of the biggest consumers of cobalt in the world, which is used for the batteries in its gadgets. To ensure it will have enough of the key battery ingredient, the iPhone maker must make its supply chain more sustainable amid industry worries of a shortage driven by the electric vehicle boom.

The company's need for cobalt is estimated at several thousand metric tons per a year.

According to the U.S. Geological Survey, global cobalt mine production was estimated at 110,000 metric tons in 2017. Congo continues to be the world’s largest source of mined cobalt, supplying more than 50 percent (64,000mt) of global production. It is distantly followed by Russia (5,600mt), Australia (5,000mt), Canada (4,300) and Cuba (4,200mt). In 2017, the U.S. produced only 650 tons of cobalt, which was 6 percent less than the year before.

Most U.S. cobalt supply comprised imports and secondary (scrap) materials. More than 45 percent of the cobalt consumed in the U.S. was used in superalloys – mainly in aircraft gas turbine engines, 7 percent in cemented carbides for cutting and wear-resistant applications, 17 percent in various other metallic applications, and 31 percent in a variety of chemical applications. The U.S. market value of cobalt consumed in 2017 was estimated at $575M.

China, being the global largest producer of refined cobalt, continues to be the key supplier of cobalt to the United States. This country is also the biggest consumer of cobalt in the world. About 80% of cobalt consumption is used by its rapidly expanding rechargeable battery industry.

In 2017, average annual cobalt prices more than doubled, driven by rising demand from end consumers, shortage of cobalt on the spot market, as well as by a sharp increase in metal purchases by investors.

Global growth in refined cobalt supply is projected to increase at a lower rate than that of cobalt consumption, which could create a shortage of the raw material in coming years.